Among the five largest economies in Asia, South Korea and Indonesia have chosen to conduct business in indigenous currencies. Recently, the central banks of the two nations met in South Korea. On this occasion, a deal was made to replace US dollars with the local currencies “Won” and “Rupiah” in economic transactions between the two nations. As Indonesia presently holds the chairmanship of ASEAN, a significant organisation of Southeast Asian nations, this agreement represents a significant step, as reported by Maritime Gateway.
A mutual agreement
The central banks of Indonesia and South Korea have reached a mutual agreement to promote the use of local currencies in bilateral transactions, including current account transactions, direct investment, and other commercial and financial transactions. The agreement aims to reduce the risk of currency exchange rate fluctuations and lower transaction costs for companies and entrepreneurs. This is considered a decisive moment for economic cooperation between the two countries.
Use of local currencies
Increased use of local currencies in bilateral transactions between Indonesia and South Korea can enhance trade and broaden the financial market. Indonesia, as the current ASEAN chairman, supports prioritizing local currencies in the region, as demonstrated by the recent agreement among Singapore, Malaysia, Thailand, the Philippines, and Indonesia to use local currencies. ASEAN is also developing a digital cross-border payment system to facilitate transactions using local currencies. Additionally, President Joko Widodo has advocated for the use of local cards instead of international cards.
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Source: Maritime Gateway
